MOSCOW, September 28 (RIA Novosti commentator Peter Lavelle) - Gazprom's Wednesday announcement that it was purchasing oil giant Sibneft for $13.01 billion dramatically expands the state's control over Russia's vast energy sectors.
Gazprom's 72.7% purchase of Sibneft shares from Roman Abramovich's Millhouse Capital for $13 billion is a surprise for market watchers. During weeks of speculation, the investment community expected that Gazprom would negotiate the price down to around $7 billion - the $13 billion price tag represents the current market value of Sibneft shares. In July, Sibneft shareholders paid themselves an extraordinary 2004 dividend of $2.3 billion.
Gazprom's willingness to pay market value for Sibneft shares is seen by some as a potential political liability for the Kremlin - enriching "oligarchs" at the state's expense may be used by ultranationalists for political purposes during the 2007-08 political season. Gazprom is expected to respond to any popular outcry about the purchase that it is only respecting property rights in Russia.
The state privatized 51% of Sibneft for $100 million at the end of 1996; later the entire company changed hands and eventually fell under the control of Millhouse Capital and a group of small shareholders. The ownership structure of Millhouse is not publicly known.
Gazprom, already Russia's largest company and energy super giant, now is set to become a major player in the country's oil patch. The purchase of Sibneft adds 6 billion barrels in oil reserves to Gazprom portfolio and producing 30% of Russia's current oil production. Gazprom's plunge into the oil business also significantly extends state-control of Russia's energy sectors.
Gazprom's purchase of Sibneft is also a defeat to its arch-rival state-owned Rosneft. Gazprom was slated to acquire Yuganskneftegaz from embattled Yukos at the end of 2004, but Rosneft - acting as an intermediary - kept the asset for itself. Since then Gazprom and Rosneft have been competing to acquire other Russian oil assets. Both companies are believed to be now eyeing the remaining production units of Yukos.
